Financial Planning & Analysis Methodologies (A Practical Approach)

FP&A is increasingly important in statutory boards and government agencies, as well as the private sector.  FP&A provides insight and impact on strategic decisions affecting an entity’s top line, bottom line, cash flow, financial position and shareholders’ value. 

It is therefore important to invest more time in FP&A and develop alternate business and financial strategies than spending time in validating data, and preparing rolling budgets and monthly management reports.  More time should be spent analysing the current and future internal business scenarios as well as external developments on the impact on business and financials.

This hands-on workshop equips you with portable FP&A skills based on accounting and finance knowledge, market data and data visualisation using charts using Microsoft Excel spreadsheet to demonstrate how it works in practice!

Programme Outline:

Session 1: Budgeting to Achieve Management Objectives

• Importance of Budget Marksmanship given resources constraint
• Various budgeting approaches - Zero-Based Budgeting, Incremental Budgeting, Probability-Adjusted Budgeting, Scenario Budgeting
• Analysis of Operating Cashflow, Investing Cashflow and Financing Cashflows
• Estimate revenue, expenses and resources required to execute business plans

Session 2: Hands-on Exercise to Develop an Annual Budget

• Develop Annual Budget for next financial year based on the last 5 years’ historical information, covering:
• Art of normalising cashflows
• Time-series analysis on financial statements
• Analysis of Revenue Structure, Expense Structure and Capital Structure
• Probability adjustments to budgets
• Business and financial assumptions for Base Case
• SWOT analysis on achievability of Management Objectives

Session 3: Long-Term Forecasting for Strategic Decisions

• Concept of Free Cash Flows
• Long-term Financial Planning Process – role of Business Units, Treasury, Finance and Stakeholders
• Continuing from above, develop business and financial assumptions for 5-year Forecast (Base Case, Best Case and Worst Case)
• Strategic review of 5-year plan:
• Operational decisions e.g., pricing strategy, best-sourcing, headcount cut, salary freeze
• Investment decisions e.g., deployment of idle cash, cash war-chest, capital expenditure
• Financing decisions e.g., debt maturity profile, access to money market versus capital markets, debt management/refinancing, risk management
• Market conditions  e.g., interest rate, foreign exchange rates
• Key success factors, drivers and controllability           

Session 4: Hands-on Exercise to Develop 5-Year Forecast & Financial Analysis

• Continuing from above, develop the 5-year Forecast (Base Case, Base Case and Worst Case)
• Cost-benefit analysis of major Operational, Investment and Financing decisions e.g., investment of surplus funds, bond issue, financial requirements to execute future sales strategy
• Review of liquidity, profitability, sustainability, long-term viability and bankability
• Key Financial Indicators:
• Liquidity
• Profitability, Growth and Quality of Earnings
• Operational Efficiency
• DuPont analysis
• Leverage and Coverage
• Valuation
• Bankability
• What are the limitations of these financial indicators?